KEY POINTS:
Telecom's rivals are looking askance at the company's status in National's new public private partnership (PPP) for a fibre-optic network providing fast broadband.
National leader John Key says the private sector will not invest in the new infrastructure because returns are too low and - because of its current infrastructure - it would be good if Telecom were involved.
But the industry has this year been celebrating the first benefits of a Government crackdown on Telecom.
A three-way split of the company and local loop unbundling is aimed at reducing the giant's power to kill competition.
National's plan would be likely to give Telecom a new dominance.
Mr Key said National's plans would include a $1.5 billion investment in the PPP for a fibre-optic network combined with support from mobile and satellite services.
He said it would be good if Telecom were involved in setting up the fibre-optic network because of its oversight of the existing infrastructure.
But he expected that the PPP would include more than one company as it developed.
He said the $1.5 billion was an investment and not a grant.
The partnership would have to deliver a financial return to the Crown but this would be reduced in the early days, he said.
He compared the taxpayers' investment to spending on roads and electricity in the past and dismissed a Government claim the plan would entrench Telecom's dominance.
"I don't think it will do that any more than cabinetisation [fibre-optic cables from exchanges to distant consumers] or local line unbundling," he said.
On April 1, business thinktank the New Zealand Institute suggested that a new broadband infrastructure monopoly would bring a negative response from Telecom's biggest rival, Vodafone.
That idea has similarities with National's proposal with a scheme that looks to ensure Telecom retains a big role in the telecommunications infrastructure.
Vodafone baulked at that plan, but was more measured yesterday.
Vodafone corporate affairs general manager Tom Chignell said that planning for the new public private partnership had to take into account the demand for services and a willingness to pay.
The Telecommunications Users Association of NZ was upbeat.
"TUANZ has been calling for politicians to keep up the momentum for change, saying New Zealand needs more investment to avoid falling behind other countries," said chief executive Ernie Newman.
Telecom spokesman Mark Watts said the company was open to discussing the National Party approach.
